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In brief: Ares issues $1bn sustainability-linked debt facility to EQT portco

Data centre operator EdgeConneX is Ares’ third borrower with an interest rate is linked to achieving sustainability KPIs.

Private debt giant Ares Management Corporation has agreed to issue a sustainability-linked debt facility of “up to approximately $1 billion” to data centre operator EdgeConneX, a portfolio company of EQT, according to a statement from Ares.

Under the agreement, the interest rate is subject to EdgeConneX meeting certain sustainability targets. Ares did not specify what these targets are, but said they “will be aligned to” EdgeConneX’s existing ESG strategy, which includes reaching net-zero carbon emissions, waste and water usage by 2030 and “developing and operating a data centre platform powered by 100 percent renewable energy”.

Ares’ commitment comes from funds in its infrastructure debt strategy. EdgeConneX was acquired by EQT’s fourth infrastructure fund in 2020.

This is the third sustainability-linked debt facility announced by Ares. In August 2021, it issued loans of £1 billion ($1.2 billion; €1.2 billion) to engineering company RSK with a margin linked to annual targets around carbon intensity reduction and health and safety. In March 2022, Ares announced sustainability-linked credit facilities of A$280 million ($195 million; €185 million) to Australian waste management company Waste Services Group.

Other debt fund managers that have issued sustainability-linked loans include Arcmont – which is offering ESG-linked margin discounts to all borrowers in its €5 billion second senior loan fund – BaringsCapzaInfraRedAviva InvestorsLGTNatixis Investment Managers’ MV CreditTikehau and Eiffel Investment Group.